CCE Vs. KANAK METAL INDUSTRIES

JUDGEMENT

(1.) Revenue filed this appeal against the order of the Commissioner (Appeals), whereby the Department's appeal was rejected.

(2.) After hearing both the sides and on perusal of the records, I find that the respondents are engaged in the manufacture of S.S. Patta/Patti classifiable under Chapter 72 of the Schedule to the Central Excise Tariff Act, 1985. During the course of audit, it was noticed that the respondents used duty paid furnace oil in the manufacture of job work materials as exempted goods. It has been alleged that during the period October, 2003 to January, 2005, the respondent availed Cenvat Credit of Rs. 30,148/ - on furnace oil used in the process of hot rolling products, which are exempted and credit is not admissible in terms of Rule 6(1) of Cenvat Credit Rules, 2002/2004. Show cause notice was issued proposing to disallow the credit and to impose penalty. The Original Authority dropped the proceedings. The Revenue filed appeal before the Commissioner (Appeals), which was rejected. Hence, Revenue filed this appeal.

(3.) I find force in the submission of the ld. C.A. It is seen that the Hon'ble Gujarat High Court in the case of Narmada Velley Fertilizers Co. Ltd. (supra) held that fuel used in the manufacture of fertilizers and generation of steam, which further utilised in the, manufacture of electricity in their captive power plant and, inputs used within the plant, credit cannot be denied. The Larger Bench in the case of Gujarat Narmada Velley Fertilizers Co. Ltd. (supra) also held that the inputs used as fuel excluded from Rule 6, credit is admissible. It is seen that the specific provisions was inserted by Notification No. (supra). So, the demand of duty is not sustainable prior to 16.05.2005. Accordingly, I do not find any reason to interfere the order of the Commissioner (Appeals). The appeal filed by the Revenue is rejected.